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How should Fintech be regulated?

There is a massive growth in Financial-Technology (Fintech) industry. Global Fintech investment has tripled from $4.05 billion in 2013 to $12.2 billion in 2014. Last year alone, Fintech investment increased more than three times the rate of overall venture capital investment.

global fintech growth
Global Fintech Financing Activity

These Fintech firms are set to take almost two-thirds of several existing products which are currently provided by traditional financial service as you can see in the below chart. Some of the impacted products are; lending, current/checking accounts and deposits. (Reported by McKinsey, 2014)

Mckinsey, bank, fintech, products
McKinsey – Global banking revenues

This growth and the rising significance of Fintech has posed a challenged for regulators all around the world to determine how best to regulate this industry.   Singapore has always been the financial hub of APAC, and is now one of the best destinations for start-ups.  Recently, Singapore MAS (Monetary Authority of Singapore) has set up a new Fintech & Innovation Group (FTIG), where it will be responsible for “regulatory policies and development strategies to facilitate the use of technology and innovation to better manage risks, enhance efficiency, and strengthen competitiveness in the financial sector.”

Regulating Fintech industry is a positive move as it will weed out ‘non genuine’ businesses, as well as promote transparency in terms of services and fees for both businesses and investors. Most important it will promote an orderly growth of the Fintech Industry.  However, regulators should be mindful of the following:-

Support Innovation

Regulator will undoubtedly be balancing the risks and value adding, whilst continuing to support innovation.  We hope that the regulators will support the core characteristics of Fintech which are its product innovations and speed to markets to better serve customers as an alternative to the traditional financial provider.

Stringent requirements Is Counterproductive.

Regulation does not come without costs to the Industry.   To date, most of the regulations has been designed for the biggest players.  Though the vast majority of Fintech companies are start-ups / early-stage companies where they all have a common challenges; limited manpower and financial resources.  Heavier regulation will most likely kill off numerous Fintech companies or reduce its ability to be innovative.  Using a regulatory ‘sandbox’ approach will be very helpful as it allows both regulator and innovators to test out and fine tune the regulation requirements before its final rolling out where affected Fintech will have to commit substantial resources to meet compliance requirements be.

Furthermore, regulators should also provide support to fledgling Fintech by a more hands-on direct support to in their endeavour to meet the requirements, rather than leave the companies on their own

Support Collaboration

By fostering a collaboration between Fintech and Banks to complimenting each other roles.  The regulator will enhance a better services to the market.  For example, UK banks are now signposting customers who are not able to serve by them to alternative finance – Fintech.  This has given customers a better access to working capital, a win-win situation. In addition to look into implementing a standardised data structure across Fintech and banking, will have the potential of further facilitating the collaboration across the financial industry to reach all segments of customers.


As a Fintech company, we hope that the to-be implemented Regulations will support innovation and Fintech eco-system to better serve our customers.

By Nalinee Chinowuthichai – co-founder of InvoiceInterchange, a Singapore invoice trading platform, where SMEs can flexibly manage their cash flow by selling invoices to a network of investors who compete to provide cash advances.



  • Melodie Laroche-Gray and François Luu , “Growth in Fintech Investment Fastest in European Market, according to Accenture Study”,, March 26 2015
  • “MAS sets up new FinTech & Innovation Group”,, July 27 2015
  • Martin Arnold , “McKinsey warns banks face wipeout in some financial services”,, September 30 2015


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